EU plans tax for Internet giants
The EU wants to introduce a digital tax to force companies that are based outside the EU but generate large profits there to pay taxes on those profits. The initial plan entails a three-percent tax on the turnover of larger companies. In the long term taxation legislation is to be amended to ensure that any company that has a significant online presence pays up. Is this a good idea?
Five reasons for the digital tax
The digital tax is definitely coming, Die Presse writes, naming five reasons why it's sure:
“First: the Brexit is reducing the EU budget and fuelling the search for alternative money sources. Second: multinationals are under attack because of their tax avoidance tricks. Third: the scandal over the Facebook user data breach is having the effect of a wake-up call. Fourth: the EU has adopted a leading role when it comes to regulating Internet companies. And fifth: these companies could be caught between the front lines in the looming trade war between the EU and the US. Why should European tax authorities continue to spare US companies when Donald Trump is slapping tariffs on European imports?”
A real opportunity
The EU must now make every effort to overcome the resistance of individual member states, El Mundo stresses:
“The EU Commission's initiative provides the opportunity to take the Union a firm step forward towards greater integration. ... However, the process won't be easy because it requires the approval of the 28 member states - including countries like Ireland, the Netherlands and Luxembourg which benefit from the current legal limbo. Nevertheless this is the only viable path for Europe if it wants to achieve its desirable goal of consolidating the fiscal union.”
Populistic and counterproductive
The Neue Zürcher Zeitung, on the other hand, sees the planned tax as populistic and potentially counterproductive:
“The interim solution may suit the interests of the big states which, owing to their high taxes, are less attractive as a location for mobile companies, but generate hefty profits for these firms. It's hardly a coincidence that the EU heavyweights France, Germany, Italy, Spain and the UK have welcomed the proposals in a joint declaration. ... But even for these states the issue could prove to be a boomerang. Since many of the companies affected are US firms, the initiative will hardly improve the already strained transatlantic relationship. And how will Berlin react if states like China follow suit and start taxing the local turnover of German carmakers?”
Create rules that apply equally for everyone
And for Postimees the tax is a good idea but it doesn't go far enough:
“The digital world is developing so fast that the legislators can't keep up. ... Companies like Facebook and Google have done all they can to avoid taxes. They developed shady financial schemes and generated money through European subsidiaries and Caribbean tax havens. ... The new digital tax is supposed to provide the EU with revenues of around five billion euros per year. All that is good news but the real goal must be to create equal conditions for all companies. ... As things stand now global companies don't have to pay any value added tax elsewhere, unlike domestic companies. This is a clear advantage which they are abusing.”